Ex-government Witness Indicted In Bank Fraud

August 19, 1986|By DEBORAH PETIT, Staff Writer

Michael Rapp, a former government witness against organized crime figures and currently the subject of several federal investigations nationally, was indicted in Fort Lauderdale on Monday for allegedly swindling a Miami bank out of about $1 million.

The federal indictment comes two years after Rapp and six other men allegedly defrauded the Flagship National Bank of Miami through a series of transactions at the bank`s Bay Harbor branch.

Flagship is now known as Sun Bank/South Florida, the indictment says.

Rapp, who co-authored the 1977 book, Wall Street Swindler: An Insider`s Story of Mob Operations in the Stock Market, appeared before U.S. Magistrate Lurana Snow Monday afternoon. Snow set Rapp`s bond at $100,000.

The government alleges that Rapp and his co-defendants opened both corporate and individual checking accounts in the names of three Broward County corporations at Flagship with the intention of defrauding the bank.

The corporations listed in the indictment include JNJ Inc. and Whatever Inc., both of Hallandale, and L & M Consultants Inc. of Pompano Beach.

The seven men then deposited worthless checks drawn on other banks into the accounts at Flagship, the indictment says. The group turned around and withdrew sums as large as $3.5 million in cashier`s checks and cash from the accounts, according to the indictment.

Rapp is the name that the Bay Harbor Island resident took when he entered the federal witness-protection program about 14 years ago. Rapp, 48, formerly was known as Michael Hellerman.

Before the change of identity, Rapp pleaded guilty in a 1970 case involving fraud against a Miami investment company, according to a March 31, 1986, article in the American Banker newspaper.

Then, in 1973, three New York crime figures were convicted after trials at which Rapp testified for the government, according to the American Banker article.

Rapp is currently under federal investigation in connection with his alleged banking activities in New York City, the Denver area, and Tampa, according to prosecutors with the U.S. Justice Department`s Strike Force office in Fort Lauderdale.

Rapp also has been named in at least two pending civil cases that allege he and his associates defrauded banks in New York City and Los Angeles out of $8 million and $1.5 million respectively.

A third civil case filed in 1984 against Rapp gave rise to the South Florida investigation that resulted in Monday`s indictment.

Charged by the grand jury with conspiring to misappropriate bank funds along with Rapp are: Louis Baccari, 43, of Fort Lauderdale; Martin Ian Roth, 50, of Miami; David Sydney Gottfried, also known as Placido Lugano, 37, no known address; William Jenner, 56, of Dallas; Stephen Metz, 44, of Beverly Hills, Calif.; and Robert Reno, 48, also of Beverly Hills.

Lawyer A. Roger Traynor Jr., who represented Flagship in the 1984 civil case against Rapp, said that as best as he can remember the bank settled the case for close to what the bank lost.

``Ultimately we came out almost even,`` Traynor said. ``We were able to plug the leak.``

In the wake of the civil case against Rapp, Flagship`s manager at the branch where all the suspect transactions occurred left the company`s employ, Traynor said.

The indictment charges the defendants corruptly misled or deceived bank officers and employees into unlawfully authorizing payment on the worthless deposits. No bank officials or employees are named in the indictment.

Rapp`s attorney, Joel Rosenthal, said his client denies the allegations in the indictment.

``He has committed no crime and will go to trial and be vindicated,`` Rosenthal said. ``The civil action (that led to the indictment) was settled a long time ago and the bank was paid.``

Rosenthal said he believes his client is an easy target for the government because of the Wall Street Swindler book in which he talked about his ``past life of crime.``